Govt asks PSBs to review top IBC cases every month
₹7 trillion worth of bad debt in five years between 2019 and 2023. Also, against ₹6.5 trillion worth of stuck assets, ₹ 94,000 crore or a mere 15% was recovered in 2023, with more than half of the recovered amount coming through the IBC route. The finance ministry’s concerns on rising cases of pendency under IBC comes after the Reserve Bank of India batted for early settlement of bad loans and also recently directed banks to tighten their lending norms and avoid any form of exuberance to make lending sustainable and prevent built up NPAs.
Till September, 2023, of the over 7,058 cases admitted to the National Company Law Tribunal (NCLT), 808 cases have seen resolution under IBC, while 2,249 cases went into liquidation. Much of these are legacy cases. However, the bankruptcy code has led to the settlement of a large number of payment defaults prior to their admission to tribunals.
According to the Insolvency and Bankruptcy Board of India (IBBI), till August, over 26,500 applications to NCLT involving default of ₹9.3 trillion have been withdrawn. Meanwhile, finance minister Nirmala Sitharaman is also expected to review work of NARCL soon. Typically, NARCL acts as a bad bank, with the objective to manage and dispose of the stressed assets of commercial banks.
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